What is a Debt Management Plan (DMP)?

Find out more about how a Debt Management Plan works and which debts you can use it for. Then talk to a free debt adviser about whether it’s the best way to pay off or clear your debts.

How a Debt Management Plan works

A Debt Management Plan (DMP) allows you to pay off your debts at a rate you can afford.

It’s suitable if you have non-priority debts like credit or store cards, overdrafts and personal loans.

Your DMP provider will help you work out an affordable payment and talk to your creditors.

You make one monthly payment to the DMP provider who then pays your creditors for you.

Which debts can I pay off with a Debt Management Plan?

You can only use a Debt Management Plan for non-priority debts. These include:

  • credit card, store card debts or payday loans
  • catalogue, home credit or in-store credit debts
  • overdrafts
  • bank or building society loans
  • personal loans
  • money borrowed from friends or family

Which debts can’t I pay off with a Debt Management Plan?

You can’t use a Debt Management Plan to pay off priority debts. These include:

  • mortgage, rent and any loans secured against your home
  • Income Tax, National Insurance and VAT
  • Council Tax
  • gas and electricity bills
  • child support and maintenance
  • TV Licence
  • hire purchase agreements, if what you’re buying with them is essential
  • court fines

Who offers Debt Management Plans?

Many free debt advice organisations can arrange a Debt Management Plan to ensure that all the money you pay into it goes towards paying off your debts. This means you could be debt free sooner than you’d hoped.

Free debt advisers give expert advice to hundreds of thousands of people every year and will understand the situation you are in. They are highly trained and will be able to give you the support you need to manage and reduce your debts.

If you choose a fee-paying provider, you should be aware that all Debt Management Plan providers must be authorised by the Financial Conduct Authority (FCA) to ensure they meet agreed standards.

Before you agree to taking out a plan with a fee-paying provider, check they have been authorised.

Get free debt advice about a Debt Management Plan

“We were so ashamed of our debt problems that we avoided telling people. Trying to live life normally and pretend that everything was ok was very difficult.”

Hayley – who runs the Disease Called Debt website and cleared debts of £41,000.

It’s always best to talk things through with an experienced debt adviser before you decide to take out a Debt Management Plan.

This is because the debt solution that is best for you depends on your personal circumstances.

Free debt advisers can help you make the right decisions, meaning you could be debt free sooner than you thought.

A debt adviser will:

  • treat everything you say in confidence
  • never judge you or make you feel bad about your situation
  • always be happy to talk to you, however small or big your problem is
  • suggest ways of dealing with debts that you might not know about
  • check you have applied for all the benefits and entitlements available to you
  • give advice about better ways of managing your money

“It is a scary thing to pick up the phone and say you have debt problems, but most people feel a huge sense of relief when they do.”

Debt Camelopens in new window – personal finance and debt blogger.

You may only need to have one conversation with an experienced debt adviser to make sure that your plan to manage or clear your debts is the right one for you.

If you need more support or don’t know where to start, you’re not alone. Nearly half of people in debt told us they aren’t sure about the best way to pay off their debts, and that is where a debt adviser can really help you.

Over eight out of ten people who have got debt advice tell us they feel less stressed or anxious and more in control of their life again.

“Debt advice just changed the way I dealt with it. Getting rid of the shame. I am only sorry it took me so long.”

A debt advice client.

The people that let their debts build up before they seek advice often find things have spiralled out of control, their cards are maxed out, no-one else will lend to them and it takes much longer to pay back what they owe.

You can contact a free debt adviser in a way that’s best for you – online, over the phone or face-to-face.

Did you find this guide helpful?